Stillwater News Press

March 8, 2014

Water 2040 plan held back by funding

By NewsPress Staff
Stillwater NewsPress

STILLWATER, Okla. — The city of Stillwater is poised to implement a water plan that city staff says will accommodate population growth and commercial development for the next 25 years. But questions about the best way to pay for the Water 2040 plan linger.

Stillwater’s city councilors, acting in their dual role as trustees of the Stillwater Utilities Authority, will be asked to make a decision about financing an estimated $65 million in infrastructure improvements this month.

The plan includes improvements to the city’s water treatment plant, new pump stations and water towers and more than 20 miles of large diameter water lines.

Work will focus on the city’s central and southwest service areas. As the oldest area of town, the central service area has been plagued with problems caused by aging and undersized lines.

New Greek houses and high-density student apartment complexes south of the Oklahoma State University campus have further stressed the system in those older neighborhoods and required piecemeal line replacements.

The southwest service area has seen much of the city’s new housing development and several additions have suffered from inadequate water pressure during peak demand times.

Water 2040 projects are well into the engineering design phase and could be started by the end of 2014 if funding is there, said Stillwater Utilities Authority (SUA) Director Dan Blankenship.

A few projects can be done within the current budget but a majority of the work remains on hold.

“We’re at a standstill,” Blankenship said.

A provision that caps the SUA’s ability to take on debt at 10 percent of the previous year’s revenue limits it to borrowing about $7 million per year.

The entire plan could be completed in about two years if fully funded but will take more than a decade if done as money becomes available, he said.

Blankenship said he worries that stringing the projects out will negate progress that’s been made in the southwest area and hinder new commercial development on the west side of town.

“When it comes to the water system, it’s indiscriminate between commercial and residential,” he said. “It just sees water users.”

He recommends changing the SUA’s trust indenture to replace the cap with a debt service coverage ratio based on revenue, operating expenses and current debt payments.

The change would focus on how much the authority can afford in payments instead of the amount that can be borrowed and allow the SUA can take advantage of lower interest rates to get more work done, he said.

Blankenship presented the trustees with three financing options in January:

1. Keep the current trust indenture and ask the voters for approval to exceed the 10 percent debt cap

2. Amend the trust indenture to allow the SUA to borrow more money

3. Adopt a “pay as you go” approach using 100 percent of the water capital fund for Water 2040 and other currently identified projects

Blankenship said he doesn’t recommend exhausting the water capital fund because it wouldn’t provide any funding for future projects or unforeseen needs.

Amending the SUA trust indenture is expected to be on the authority’s March 17 agenda.

It requires a unanimous vote of the five trustees.